Best Buy Price Matches Gamestop Used Games

[The 1 2 P]

Yes friends, this is BIG (http://www.gamepro.com/article/news/211568/best-buy-store-price-matches-gamestops-used-games/#comments) news in the world of video games. Best Buy will start selling their new games at the same price as Gamestop's(and Game Crazy's) used games in an effort to steal some of Gamestop's monopolizing used game market share. So a used copy of say, UFC Unleashed for $49 at Gamestop will equal a new copy at Best Buy for the same price.

Now before everyone starts heading out to their local Best Buy, keep in mind that this program has just gotten started at a single store in Utah. This is the first test store to study the results in order to determine how fast they will expand the program. Hopefully it expands to more stores in time for the busy holiday season. Further more, I hope other retail stores take an interest in this as well. Of course, that will all depend on how successful the program is for Best Buy.

Finally, if you live in Utah and can get to the test store please tell us about your experience.

[heybtbm]

New releases for $54.99 (Gamestop's used price) is a good start. Combined with BB's excellent Reward Zone Gamers Club, I know where I'll be buying most of my new titles. With the constant stream of $10 RZ coupons, it even beats Amazon.

[unwinddesign]

This won't last long. They'll be bleeding money if this takes off. They're basically giving away the games in an attempt to increase market share. Losing it with the cost of the floor space.

Sure, they're Best Buy and they have money, but Circuit City was on top at one point...until they started doing dumb shit and branching off into business areas outside their core competencies.

Good for the consumer, obviously, but I don't see this expanding outside that store, and if it does, I don't see it benefiting Best Buy in any fashion in the long run.

It would be hilarious if Gamestop responded by dropping all their new release used games like Halo 3 ODST to $35. Best Buy would be bleeding money so badly trying to fulfill orders and Gamestop would still be making like a 40% gross profit margin.

[PapaStu]

Won't make me shop there more. I was in my local BB a few days ago. Their DS section looked worse (and smaller) than it did the day after Xmas the last 2 years. They had a horrible selection of Xbox 360 games and the only thing they had plenty of was PS3 games, games which i'm not buying (heck, i've yet to use my PS3 to play any release other than the Pain PSN title and i've got a dozen PS3 games). I'd rather go to GameStop and have a selection of games to choose from.

[Dangerboy]

This would work on games you want. The used return policy at GS is still better. Plus it's still cheaper with the discount card (though the rewards zone points balance that).

[Lostdwarf]

working at best buy, in the video game dept this is news to me, but i will look into it.

mike

[j_factor]

Pretty cool, but obviously a temporary thing, if it even gets expanded at all. It's obviously not sustainable.

Also, Best Buy's selection tends to be kind of poopy.

[Dangerboy]

Also an important factor that I didn't think of until just now:

Best Buy is chasing ghosts of Circuit City's past. CC had a discount card program that was essentially the "New" to GameStop's "Used". For $20 you got 10% off new games, rather than the $15 for 10% off used.

Look where that got Circuit City.

The biggest problem with Best Buy's strategy is two fold: you will have customer's argue over the Edge based discount used to price match ($54.99 vs $49.49) as well as the overhead on the games. 5 to 10 off of a new game is a LOT of lost profit.

Considering how fast all their "sales games" last (read: they don't), all I see is an even shittier selection at BB while all the eBay'ers ramp up the discounts and try to make the $10 profit online. (Which oddly enough, would be more lost sales for the game companies).

Without the "didn't like it" return policy GS has, other retailers / publishers have to think of something else.

[crom]

how in hell does this even work?

I understand price matching... you bring in a flyer from a competitor and say "look heres the price now you beat it"

used game prices vary from store to store, their never the same at each store...

how do I go into best buy and say "hey I saw a used copy of halo 3 at a gamestop for $5 beat it"

huh?

[Therealqtip]

I hope it works, I hate gamestop and their corruptness.

[heybtbm]

There's no hate like Best Buy hate. Keep fighting the good fight. Um, yeah. :roll:

[Ro-J]

So this seems to be good for game developers. If people buy their games new, instead of used, then they get a piece of the action. I wonder if publishers will be striking a deal with BB to allow them to keep a higher percent than normal of the profits.....seems like the best way to deal with the used game threat they keep whining about.

[j_factor]

So this seems to be good for game developers. If people buy their games new, instead of used, then they get a piece of the action. I wonder if publishers will be striking a deal with BB to allow them to keep a higher percent than normal of the profits.....seems like the best way to deal with the used game threat they keep whining about.

It doesn't work that way. If this takes away droves of customers who would otherwise have bought the games used at GS, GS will lower their prices. At which point Best Buy's matching would become completely untenable. In fact, even without much change in business, GS could easily nip them in the bud right off with a general price drop, and then bring their prices back up when Best Buy gives up on the program, which would happen quickly if every item in their videogame department was being sold at a loss.

[Lostdwarf]

had someone at work check this and apparently its in a test market and that happens to be in utah (go figure). so if you live in Utah check it out.

dwarf

[Bojay1997]

This won't last long. They'll be bleeding money if this takes off. They're basically giving away the games in an attempt to increase market share. Losing it with the cost of the floor space.

Sure, they're Best Buy and they have money, but Circuit City was on top at one point...until they started doing dumb shit and branching off into business areas outside their core competencies.

Good for the consumer, obviously, but I don't see this expanding outside that store, and if it does, I don't see it benefiting Best Buy in any fashion in the long run.

It would be hilarious if Gamestop responded by dropping all their new release used games like Halo 3 ODST to $35. Best Buy would be bleeding money so badly trying to fulfill orders and Gamestop would still be making like a 40% gross profit margin.

Just a point here. Best Buy enjoys a 30% margin on new game sales. They also sell lots of other items, so they don't depend on just game sales. So, selling at a discount of less than 10% is not a huge problem, especially when they are selling to people who would otherwise not buy from Best Buy. Heck, at most stores, if you haggle with the manager they can give you 10% off anyway. GameStop cannot afford to reduce their margin on used game sales since they don't have healthy new game sales to fall back on and with their massive expansion in the number of stores, they have incredible pressure to deliver increasing revenue every single quarter. As far as I'm concerned, this has the potential to be a win-win for Best Buy.

[The 1 2 P]

New releases for $54.99 (Gamestop's used price) is a good start. Combined with BB's excellent Reward Zone Gamers Club, I know where I'll be buying most of my new titles. With the constant stream of $10 RZ coupons, it even beats Amazon.

Although they are pretty much the same thing, Best Buy's Reward Zone program rewards you for ALL Best Buy purchases where the Gamers Club just rewards you for game purchases. But it still means that everytime you buy games at Best Buy you get points towards a RZ certificate and points towards a GC certificate. And like you said, just a few new game purchases will add up to a couple free certificates in no time.

[studvicious]

Let me be clear. Best Buy is so financially strong right now it's crazy. Also, like it has been mentioned before this is just a test program at ONE store. If they find that this is something that will bring value to the customer and also maintain a small profit for them, they will more than likely roll it out company wide. I'm sure that the game publishers realize that selling the games to Best Buy for a cheaper price than normal will make more sense than losing out on a sale ENTIRELY from a used game sale at Gamestop days after the game has been released.

[RPG_Fanatic]

I live in Utah and West Jordan (the test store) is just 10 minutes away so I'll go there and see if it's true today.

[Ro-J]

It doesn't work that way. If this takes away droves of customers who would otherwise have bought the games used at GS, GS will lower their prices. At which point Best Buy's matching would become completely untenable. In fact, even without much change in business, GS could easily nip them in the bud right off with a general price drop, and then bring their prices back up when Best Buy gives up on the program, which would happen quickly if every item in their videogame department was being sold at a loss.

I'm just thinking out loud but......It's been a long time (years) since I've traded in a game at GS, but from what I remember they offered very little for a trade-in. If they lower their prices then they will have to offer even less for a trade-in, so little maybe that the every day super casual gamer may begin to think to look elsewhere (Ebay? Amazon?) to sell their used games. Once they find an alternate, and potentially more lucrative, means of getting rid of old games then GS will lose their business forever, hurting them in the long run. I'm sure places like Amazon or Walmart, which are starting into the used game business, will consciously keep their trade-in prices a little bit higher than what GS lowers to.

[heybtbm]

Although they are pretty much the same thing, Best Buy's Reward Zone program rewards you for ALL Best Buy purchases where the Gamers Club just rewards you for game purchases. But it still means that everytime you buy games at Best Buy you get points towards a RZ certificate and points towards a GC certificate. And like you said, just a few new game purchases will add up to a couple free certificates in no time.

You have to be a RZ member to be a Gamers Club member. It's the same thing, same card, etc.

[The 1 2 P]

You have to be a RZ member to be a Gamers Club member. It's the same thing, same card, etc.

I know, I'm already a member of both and have gotten two certificates in the span of a month because I was closing in on my RZ certificate total and also made the GC total with fewer purchases.

[duffmanth]

Gamestop is fucking retarded selling used games $5 cheaper than new. Used games should be at least $15-20 cheaper than new. Like someone mention earlier in this thread, it'll be interesting to see how long Best Buy can keep this up. Having worked in a video game store for a few years back in high school, I found out that there is a very slim markup on new games, consoles, and accessories. Usually less than $5 profit on new consoles, and $5-10 profit on new games and accessories.

Video games are a loss leader for big box stores like Best Buy and Wal Mart anyway, these stores are willing to carry these items and make virtually nothing on them in the hopes of getting people into the stores to buy something where there is a ridiculous markup like HDMI cables, universal remotes, and basically any other kind of accessory.

[mobiusclimber]

I wouldn't use this for NEW releases, but I've seen some great deals on older games at my local BB that would rock even harder if they were as cheap as used. Like $10 and $20 DS games lowered by $5 or more.

[unwinddesign]

Just a point here. Best Buy enjoys a 30% margin on new game sales. They also sell lots of other items, so they don't depend on just game sales. So, selling at a discount of less than 10% is not a huge problem, especially when they are selling to people who would otherwise not buy from Best Buy. Heck, at most stores, if you haggle with the manager they can give you 10% off anyway. GameStop cannot afford to reduce their margin on used game sales since they don't have healthy new game sales to fall back on and with their massive expansion in the number of stores, they have incredible pressure to deliver increasing revenue every single quarter. As far as I'm concerned, this has the potential to be a win-win for Best Buy.

30%? Link please to official company documents or some verifiable source. All the numbers I've seen over the past years have put the gross margins for a game at around $8 - $10 for a new game at $50, and $10 - $12 for a new game at $60.

Did you read Amazon's recent earnings report? Their revenue was down...because of game sales. They sell 1000x more items than Best Buy. Games are important, particularly to an electronics retailer. You can use the Xbox 360 etc. to sell those big expensive screens, convincing someone it's worth it.

Gamestop can't afford to reduce margin? They don't WANT to, but they can definitely afford it. Don't have healthy new game sales? They don't sell as many games new as used, but that benefits them, since they have a 50% gross profit margin on used games (http://www.edge-online.com/news/gamestop-used-game-sales-pegged-2b) vs. 20% gross profit margin on a new sale. How can BBY possibly have a higher gross profit margin on new titles than GME, which specializes in the field? Your numbers don't make any sense.

Best Buy can't compete with GME's used games. They don't have a stream of new release games like Halo 3: ODST available for $25 a copy. Unless game developers are willing to match the price of used trade-in value when selling to BBY, this program cannot possibly be profitable and will die.

This won't work for other reasons. If customers were interested in value, then they would obviously all be selling their games on eBay instead of to GME. Since this isn't the case, and GME's crap trade-in values are common knowledge, there must be some other reason people keep sticking to Gamestop...like instant gratification, lots of buy 2 get 1 deals, extra trade-in credit bonuses for new titles etc. BBY can't really compete with all that. It's not just "it's cheaper." I can get a lot of new release games for $57 new, with no tax on Amazon. That's about the same as the $55 used with tax at GME. Yet people still go to GME. Hmmm.

[Bojay1997]

30%? Link please to official company documents or some verifiable source. All the numbers I've seen over the past years have put the gross margins for a game at around $8 - $10 for a new game at $50, and $10 - $12 for a new game at $60.

Did you read Amazon's recent earnings report? Their revenue was down...because of game sales. They sell 1000x more items than Best Buy. Games are important, particularly to an electronics retailer. You can use the Xbox 360 etc. to sell those big expensive screens, convincing someone it's worth it.

Gamestop can't afford to reduce margin? They don't WANT to, but they can definitely afford it. Don't have healthy new game sales? They don't sell as many games new as used, but that benefits them, since they have a 50% gross profit margin on used games (http://www.edge-online.com/news/gamestop-used-game-sales-pegged-2b) vs. 20% gross profit margin on a new sale. How can BBY possibly have a higher gross profit margin on new titles than GME, which specializes in the field? Your numbers don't make any sense.

Best Buy can't compete with GME's used games. They don't have a stream of new release games like Halo 3: ODST available for $25 a copy. Unless game developers are willing to match the price of used trade-in value when selling to BBY, this program cannot possibly be profitable and will die.

This won't work for other reasons. If customers were interested in value, then they would obviously all be selling their games on eBay instead of to GME. Since this isn't the case, and GME's crap trade-in values are common knowledge, there must be some other reason people keep sticking to Gamestop...like instant gratification, lots of buy 2 get 1 deals, extra trade-in credit bonuses for new titles etc. BBY can't really compete with all that. It's not just "it's cheaper." I can get a lot of new release games for $57 new, with no tax on Amazon. That's about the same as the $55 used with tax at GME. Yet people still go to GME. Hmmm.

I don't know where you are getting your numbers from. The retail margin for large chains on video games and other consumer media is 30%. That applies to Toys R Us, Amazon, Target, Walmart and Best Buy. That's the same deal Gamestop gets on their new games. Obviously, on used sales their margin is whatever they pay for the game versus what they can sell it for. A smaller game store buying from a distributor usually only gets the 10%-15% margin you are talking about. If you spend a little time looking at the annual reports for Best Buy, game sales are less than 10% of their total sales and a little over a third of their recorded media sales. They make their money on appliances, computers, cell phones, cameras, electronics, etc....

Best Buy doesn't have to compete with Gamestop, but they are an easy target and frankly, if they even steal 5% of Gamestop's used sales, it will do significant damage. Gamestop has massive overhead with 4,000 stores and no other product lines to fall back on. They are under incredible pressure to keep delivering rising profits and any damage to that trend is going to create massive problems for them on the corporate level.

Personally, I buy most of my games from Amazon, but I know lots of people who buy from Gamestop and the only reason they do so is price. If a consumer can get the exact same game, sealed and perfect from Best Buy which is in every major area in the country today, for the same exact price as a used game from Gamestop, they are going to do it. Gamestop's only response will have to be to reduce prices further which means lower trade-in values which will have a direct impact on the number of people willing to sell to them and continue getting stuck in their circle of low TIV, store credit and the perpetual trading of games for far less than they are worth only to get another used game in poor shape.

[chrisbid]

this will be neither a success or a failure. unless there is a barrage of television ads promoting the program, few people will take advantage of the offer

bb seems to be really quick on clearing out games that dont sell vert well. these are the titles that have the biggest potential markdown with the match-gamestop-used-price service. popular games do not get much of a markdown at GS, so five dollars off a hot title for the few people that ask for it is not much of a big deal to Best Buy

[j_factor]

I'm just thinking out loud but......It's been a long time (years) since I've traded in a game at GS, but from what I remember they offered very little for a trade-in. If they lower their prices then they will have to offer even less for a trade-in, so little maybe that the every day super casual gamer may begin to think to look elsewhere (Ebay? Amazon?) to sell their used games. Once they find an alternate, and potentially more lucrative, means of getting rid of old games then GS will lose their business forever, hurting them in the long run. I'm sure places like Amazon or Walmart, which are starting into the used game business, will consciously keep their trade-in prices a little bit higher than what GS lowers to.

You're making it sound like Gamestop competes with Amazon, and Gamestop competes with Best Buy, but Best Buy and Amazon don't compete. I'm not seeing how Amazon doesn't also lower their prices.

And anyway, the main reason people trade in games at GS is because you can get rid of anything for one of the systems they stock and get credit for it right then and there. I'm not really seeing any competitiveness on trade-in values. Even when EB was still around, the two chains weren't really competing for trade-ins (aside from the occasional extra credit deal, which GS still does). They never really advertised their trade-in values at all.

[unwinddesign]

I don't know where you are getting your numbers from. The retail margin for large chains on video games and other consumer media is 30%. That applies to Toys R Us, Amazon, Target, Walmart and Best Buy. That's the same deal Gamestop gets on their new games. Obviously, on used sales their margin is whatever they pay for the game versus what they can sell it for. A smaller game store buying from a distributor usually only gets the 10%-15% margin you are talking about. If you spend a little time looking at the annual reports for Best Buy, game sales are less than 10% of their total sales and a little over a third of their recorded media sales. They make their money on appliances, computers, cell phones, cameras, electronics, etc....

Link please with verifiable data. This article (http://www.gamasutra.com/php-bin/news_index.php?story=23396) claims that GME's profit margin is 21% on new games.

Whereas this dude, (http://www.1up.com/do/blogEntry?bId=9000777&publicUserId=5603564) who writes for 1up, claims that BBY's profit margin is 30% and that they buy games for "$40 - $46." He provides no sources, and no links to any financial statements. Hmmm.



Best Buy doesn't have to compete with Gamestop, but they are an easy target and frankly, if they even steal 5% of Gamestop's used sales, it will do significant damage. Gamestop has massive overhead with 4,000 stores and no other product lines to fall back on. They are under incredible pressure to keep delivering rising profits and any damage to that trend is going to create massive problems for them on the corporate level.

Best Buy doesn't have a lot of overhead? They have to pay a lot of money for that floorspace. It hurts worse when the products aren't making any money or, worse, are losing money. As posted in the article I linked to, Gamestop's profit margins (gross) are 48% on used games. Even at your purported 30% profit margins (gross) on new games, which I seriously doubt given all the numbers I've seen from GME/other retail chains, this gives Gamestop a very wide cushion against BBY. BBY cannot compete with GME's pricing, period.

Taking a loss to drive a competitor out of the market is nothing new, but it's not something BBY is really in a position to do. As of the last financial quarterly report, GME had 230 million in cash and BBY had 535 million. Both companies, over a year ago, had more than twice as much cash as they do currently. Both still have healthy cash reserves, but they're not going to fuck around with their shrinking cash reserves in a shit economy where video games saw a big drop off for the first time in 9 years. BBY also has a lot of other areas where they might need that cash.

It's just not financially feasible or realistic. Good for consumers? Yeah, sure. But it's not gonna do BBY's bottom line one lick of good, and they can't stick with it long enough in this type of environment to really put the squeeze on GME.

It's funny; people love to beat the "Gamestop is fucked" gong whenever a competitor rises into the arena. Kind of like how people love to ring the "Microsoft Windows is losing tons of marketshare!" every time it's reported another person switched over to MacOSx. Gamestop isn't going anywhere. Amazon's used program, BBY's used program, Gamecrazy, pawn shops, downloadable games...they're all out there. Gamestop is still doing fine.

And Gamestop's market share reigns supreme over all of them, and will continue to do so. That doesn't mean they won't have to make adjustments, but some dumbass Best Buy "price match," which isn't remotely feasible, is not a threat. Not even close. I own a decent amount of Gamestop's stock, so I should have every reason to be worried, or running over to Fidelity to sell out when stuff like this comes out. But every time I look at the numbers closely, GME is the one coming out ahead. Doesn't mean it's gonna be like that forever, but BBY isn't gonna be the one to take them down. I mean, seriously, has anyone been to BBY to buy games recently? Their organization sucks, their selection is atrocious, their prices on most titles that aren't discounted are garbage...they're just not a threat at all. I'd rather go to Wal*Mart to buy games, and I fucking hate Wal*Mart.

[studvicious]

As of the last financial quarterly report, GME had 230 million in cash and BBY had 535 million.

Ummm, no. BBY has a few BILLION in cash. Whereas that number you gave for Gamestop is pretty close.

[RPG_Fanatic]

I went to that Best Buy yesterday and they have the regular prices still but they said they check Gamestop's used prices online then discount a game that way.

[Bojay1997]

Link please with verifiable data. This article (http://www.gamasutra.com/php-bin/news_index.php?story=23396) claims that GME's profit margin is 21% on new games.

Whereas this dude, (http://www.1up.com/do/blogEntry?bId=9000777&publicUserId=5603564) who writes for 1up, claims that BBY's profit margin is 30% and that they buy games for "$40 - $46." He provides no sources, and no links to any financial statements. Hmmm.



Best Buy doesn't have a lot of overhead? They have to pay a lot of money for that floorspace. It hurts worse when the products aren't making any money or, worse, are losing money. As posted in the article I linked to, Gamestop's profit margins (gross) are 48% on used games. Even at your purported 30% profit margins (gross) on new games, which I seriously doubt given all the numbers I've seen from GME/other retail chains, this gives Gamestop a very wide cushion against BBY. BBY cannot compete with GME's pricing, period.

Taking a loss to drive a competitor out of the market is nothing new, but it's not something BBY is really in a position to do. As of the last financial quarterly report, GME had 230 million in cash and BBY had 535 million. Both companies, over a year ago, had more than twice as much cash as they do currently. Both still have healthy cash reserves, but they're not going to fuck around with their shrinking cash reserves in a shit economy where video games saw a big drop off for the first time in 9 years. BBY also has a lot of other areas where they might need that cash.

It's just not financially feasible or realistic. Good for consumers? Yeah, sure. But it's not gonna do BBY's bottom line one lick of good, and they can't stick with it long enough in this type of environment to really put the squeeze on GME.

It's funny; people love to beat the "Gamestop is fucked" gong whenever a competitor rises into the arena. Kind of like how people love to ring the "Microsoft Windows is losing tons of marketshare!" every time it's reported another person switched over to MacOSx. Gamestop isn't going anywhere. Amazon's used program, BBY's used program, Gamecrazy, pawn shops, downloadable games...they're all out there. Gamestop is still doing fine.

And Gamestop's market share reigns supreme over all of them, and will continue to do so. That doesn't mean they won't have to make adjustments, but some dumbass Best Buy "price match," which isn't remotely feasible, is not a threat. Not even close. I own a decent amount of Gamestop's stock, so I should have every reason to be worried, or running over to Fidelity to sell out when stuff like this comes out. But every time I look at the numbers closely, GME is the one coming out ahead. Doesn't mean it's gonna be like that forever, but BBY isn't gonna be the one to take them down. I mean, seriously, has anyone been to BBY to buy games recently? Their organization sucks, their selection is atrocious, their prices on most titles that aren't discounted are garbage...they're just not a threat at all. I'd rather go to Wal*Mart to buy games, and I fucking hate Wal*Mart.

I'm sorry I can't link you to an article disclosing Best Buy's margin, but I have provided legal services to at least one start-up publisher seeking distribution of video games and I know that what we were told by the distributors we approached like Jack of All Games, Tommo, etc... was that the margin for Best Buy and Walmart is 30% and our numbers had to reflect that and also include a separate distributor margin, return allowances, etc...

I think you are confusing two separate Best Buy initiatives with this argument. I agree that Best Buy and other chains getting into used game buy backs and sales is not going to do much damage to Gamestop. However, competing with Gamestop's ridiculous skimpy discount on newer used games certainly will have an impact. It's not going to have much impact on the teenagers who come into Gamestop and trade games weekly, all the while loosing more and more equity in their games and essentially paying to rent games from Gamestop. It will, however, have a huge impact on the rest of the game buying population who buys used at Gamestop because of price.

I don't know if you realize this or not, but a lot of people hate Gamestop. From their practice of gutting games to putting stickers all over everything to trying to sell you all sorts of crap when you get to the register. It's really tough to buy gifts for people there and I've had more than one parent tell me they would never go in there again. These people are an ideal market for this promotion.

I know many, many people who only buy new games from Best Buy. I know if Amazon ever starts charging tax in my state that I will only buy from Best Buy and maybe Toys R Us. Best Buy has good sales on a regular basis and are quick to make price adjustments and cuts. They also stock mainstream and a percentage of more obscure games. Their Reward Zone, Gamer Zone and regular 10% off coupons make them price competitive with Amazon and certainly with other brick and mortar retailers.

I'm sorry that you hate Best Buy, but the reality is that this is a very creative promotion that takes Gamestop on head-on. It may not crush Gamestop, but it sure as heck can do some damage if it is expanded to all of Best Buy's 1100 stores around the US.

[Flashback2012]

I posted this on another forum


Oy...what a boneheaded move on the part of Best Buy. I know this is only a test and being done in only one store at the moment but it still sounds like a colossally bad idea.

It would be great for them if both Gamestop and Game Crazy maintained the status quo and kept the pricing on the used copies of newer releases only $5 lower than their new counterparts. The thing I find boneheaded is that Best Buy has NO control over how either GS/GC control their used pricing.

Let's say that when Halo 3:ODST drops, GS/GC set the used price of the game at like $29.99 or something ridiculously low for like the first month or so, going so far as to even printing it (and fucking with Best Buy even further by printing the price minus the Edge Card discount). Sure, GS/GC would lose the sale on the new game but they would fucking BLEED Best Buy. I know Best Buy sells more than just video games but it's bad business if you have to have the other product lines in the store help prop up one that is costing you money hand over fist.

As for GS/GC honoring that price, well I can't speak for GC but I know GS could issue a mandate to all the stores that all used copies of the game be immediately returned to the warehouse for safekeeping until the "sale" price of the game goes back to "normal". Is it a dick move? Sure, but once a customer agrees to sell them the game, it's their property and they can do whatever the hell they want with it.

The other side of the coin is while GS/GC would lose out on the new sale of the game, it then becomes a matter of what to do with the game when the customer is tired of it and wants to get rid of it. Smart people know there's a plethora of alternatives available to them and can sell the game on their own via Ebay, Amazon, or whatever. However in my time there, I've seen many a customer who wasn't willing to exert the extra effort needed and took whatever GS was willing to give them for it. Best Buy loses out there as well since they currently do not offer any kind of a trade-in program.

While both companies are evil and vile, the nice thing is if such hardball were to be played between them, the customer is the overall winner.

I've got both a Best Buy and a Gamestop right next to me and more often than not, I find myself coming out of Best Buy empty handed more often than I do when coming out of GS. The selection at Best Buy is horrible and the pricing is the same as it is everywhere. There's only been a handful of times that they had something I wanted for a price I was willing to pay.



I'm sorry I can't link you to an article disclosing Best Buy's margin, but I have provided legal services to at least one start-up publisher seeking distribution of video games and I know that what we were told by the distributors we approached like Jack of All Games, Tommo, etc... was that the margin for Best Buy and Walmart is 30% and our numbers had to reflect that and also include a separate distributor margin, return allowances, etc...

I know a guy in the area who runs one of the mom and pop game stores and he relayed to me that his buy price isn't even close to what companies like GS, Best Buy, and Target get for the exact same item. A margin of 25-30% doesn't sound unreasonable but I imagine 20-25% is more a realistic number as middle men like JoAG and Tommo are looking for a slice of the pie as well and the publisher will only discount the game so much for them.


I think you are confusing two separate Best Buy initiatives with this argument. I agree that Best Buy and other chains getting into used game buy backs and sales is not going to do much damage to Gamestop. However, competing with Gamestop's ridiculous skimpy discount on newer used games certainly will have an impact. It's not going to have much impact on the teenagers who come into Gamestop and trade games weekly, all the while loosing more and more equity in their games and essentially paying to rent games from Gamestop. It will, however, have a huge impact on the rest of the game buying population who buys used at Gamestop because of price.

I went over this in my cut/paste. If Best Buy wanted to play hardball, GS could play hardball back. I worked for them for a few years, I know they can dig in their heels when they need to. As I stated above, Best Buy is at their mercy when it comes to the used game pricing model. They could set a stupid low price on the used copy of the game for the first month or longer and hold any copies they do get back until they return the price to "normal". They'll lose those new sales for sure, but they'll bleed Best Buy in the process. Also, if a customer did buy a game at say $29.99 'cuz GS marked it at that and then went to trade it in when they were tired of it....ooops, Best Buy doesn't buy used games. GS can advertise they'll give $25 for it and then the customer will see they're only out $5 instead of $30.


I don't know if you realize this or not, but a lot of people hate Gamestop. From their practice of gutting games to putting stickers all over everything to trying to sell you all sorts of crap when you get to the register. It's really tough to buy gifts for people there and I've had more than one parent tell me they would never go in there again. These people are an ideal market for this promotion.

Y'know...hate is such a strong word. :drinking: I think it's more likely that people are aggravated and irritated at some of Gamestop's practices. The store I used to work at just got a mandate about some of the stickers. They were told that they were to no longer put stickers on the spines of the cases. It may not seem like a lot for Joe Schmoe the customer but for someone who's worked there, it's a HUGE deal. Stickering the spine of games took extra time that we already didn't have and I knew a lot of stores that applied the stickers directly to the insert, most of time this ruined the insert as the stickers wouldn't come off easy or would mangle the insert.

I know GS as a company is by no means a saint but at the same time, neither is Best Buy. One of the guys I worked with at GS went to work for Best Buy for a bit and he had some real horror stories about the place that made it seem like working for GS was the best thing in the world. ^^;


I know many, many people who only buy new games from Best Buy. I know if Amazon ever starts charging tax in my state that I will only buy from Best Buy and maybe Toys R Us. Best Buy has good sales on a regular basis and are quick to make price adjustments and cuts. They also stock mainstream and a percentage of more obscure games. Their Reward Zone, Gamer Zone and regular 10% off coupons make them price competitive with Amazon and certainly with other brick and mortar retailers.

I've yet to see such "good sales and quick price adjustments and cuts" from Best Buy and I go in there on a regular basis. Like I said, more often than not I'm walking out empty handed. If those sales are indeed so great and they're selling out before I get there, it's not doing me a damn bit of good. :monkey: Sure you can advertise it and what not but if you don't actually have the item in stock for purchase or have a ridiculously low amount of product that is on sale then what's the point? :?


I'm sorry that you hate Best Buy, but the reality is that this is a very creative promotion that takes Gamestop on head-on. It may not crush Gamestop, but it sure as heck can do some damage if it is expanded to all of Best Buy's 1100 stores around the US.

I can't speak for the person you were replying to but I certainly don't hate Best Buy. I have found their gaming section to be severely lacking for quite some time now though. I also don't hold any kind of special love for GS either, even though I worked for them for years. The stuff you "hate" about them I never cared for either and if they made a few moves to fix that, a lot of the "haters" would clamp up in a hurry (yet being the nerdrage basement dwellers they are would find something else to bitch about in regards to GS :D)

[mobiusclimber]

I don't like Best Buy OR Gamestop, but I have to tell you, GS gets most of my rage (except when I see Best Buy do something totally stupid, like put one those "spider"-type theft prevention devices around a limited edition box set like the Resident Evil 5 box where the box just totally gets crushed... man I wanted to take that game and smash in the head of the manager there w/ it). GS tho... they gut new games and sell them as new even tho they're opened, they rent "new" games out to their employees, they sticker the boxes all to hell, they sell a disc only game for the same price as one that's complete, and their prices on average suck hardcore. Best Buy can be fairly overpriced on their games, but I've also seen some decent prices on older "new" games that they were probably discounting just to make room for new stock. Every time I go into the local BB, there's new DS, PSP & PS2 games for sale for $10~15 apiece. Most of the time, that's the Amazon new price on the games anyway, but it's nice to see some competitive pricing, even if it's just on stuff they want to clear out.

I will say that I've only purchased one game from BB, but the only times I've bought games from GS was when they have B2G1 sales. Never will I buy a new game from them, and seldom would I buy a used one. Why when I have access to Ebay and Amazon where games are 10%+ cheaper?

[heybtbm]

I've yet to see such "good sales and quick price adjustments and cuts" from Best Buy and I go in there on a regular basis. Like I said, more often than not I'm walking out empty handed. If those sales are indeed so great and they're selling out before I get there, it's not doing me a damn bit of good. :monkey: Sure you can advertise it and what not but if you don't actually have the item in stock for purchase or have a ridiculously low amount of product that is on sale then what's the point? :?

You must live by the suckiest Best Buy in the world. A-list games are advertised for $10 under MSRP every week and are plentiful (recent example: Gear of War 2 was just in the ad two weeks ago for $29.99).

As far as their overall selection, our two Best Buy's in town rival Gamestop. Low-print Atlus, Xseed and Nippon Ichi RPG's can be easily found. We even had PSP and DS imports a few years ago.

I don't really have anything against Gamestop, but with the Reward Zone and RZ Gamer's Club, there's really no reason NOT to buy my games at Best Buy (double negative intended).

[j_factor]

You must live by the suckiest Best Buy in the world. A-list games are advertised for $10 under MSRP every week and are plentiful (recent example: Gear of War 2 was just in the ad two weeks ago for $29.99).

As far as their overall selection, our two Best Buy's in town rival Gamestop. Low-print Atlus, Xseed and Nippon Ichi RPG's can be easily found. We even had PSP and DS imports a few years ago.

I don't really have anything against Gamestop, but with the Reward Zone and RZ Gamer's Club, there's really no reason NOT to buy my games at Best Buy (double negative intended).

I guess I must also live by the worst Best Buy in the world, because the last three times I went in there, I brought a written list of PS3 and Wii games, and left empty handed. The last time, I was mainly looking for Broken Sword for Wii, because I'd heard that it dropped to $30, and also Prince of Persia for PS3, because I figured it had probably dropped to somewhere around there. They had neither. And it wasn't because they were out of stock; there was no place on the shelf for them. Broken Sword came out less than 6 months ago, and Prince of Persia came out last December. They're not exactly old.

So yeah, guess where I bought them.

[Therealqtip]

I don't like Best Buy OR Gamestop, but I have to tell you, GS gets most of my rage (except when I see Best Buy do something totally stupid, like put one those "spider"-type theft prevention devices around a limited edition box set like the Resident Evil 5 box where the box just totally gets crushed... man I wanted to take that game and smash in the head of the manager there w/ it). GS tho... they gut new games and sell them as new even tho they're opened, they rent "new" games out to their employees, they sticker the boxes all to hell, they sell a disc only game for the same price as one that's complete, and their prices on average suck hardcore. Best Buy can be fairly overpriced on their games, but I've also seen some decent prices on older "new" games that they were probably discounting just to make room for new stock. Every time I go into the local BB, there's new DS, PSP & PS2 games for sale for $10~15 apiece. Most of the time, that's the Amazon new price on the games anyway, but it's nice to see some competitive pricing, even if it's just on stuff they want to clear out.



I agree to everything you just said, I was looking at some CE boxes with that thing around them totally getting crushed. And my friend bought bad company like a week ago and they didn't have the case or disc and I was like they really shouldn't charge full price for that shit. maybe like 2 bucks off or something?

[Nikademus1969]

Best B uy used to sell new music CD's for 8 bucks back in the day, and they did it for quite a while. They're doing it to get people in the door. They figure that if you come in there to get a cheap game, you'll pick something else up too.

[chrisbid]

putting pressure on gs is a good idea, they are extremely leveraged in debt (the EB and funcoland takeovers), and any drop in their fat profit margins would be bad news for their financials.

[portnoyd]

Being as I prefer shopping at Best Buy, even with their haphazard at best game displays, this is welcome news to possibly see locally. How it makes any sense for them, I don't know, but color me greedy - $5 to $10 saved for me is not something I will turn down.

It would be nice if Gamestop had a competitor that could make them sweat, coughJoecough. ;)

[The 1 2 P]

I went to that Best Buy yesterday and they have the regular prices still but they said they check Gamestop's used prices online then discount a game that way.

Interesting. The only problem I see with this method is that sometimes there are price differences between GS's used in-store games and used online games. Thanks for letting us know how it works though.


You must live by the suckiest Best Buy in the world. A-list games are advertised for $10 under MSRP every week and are plentiful (recent example: Gear of War 2 was just in the ad two weeks ago for $29.99).

Although I actually like shopping at Best Buy, I'm going to have to side with the other two guys here. Pretty much any sale Best Buy has where games are advertised for $9.99 or less, you are never going to get it unless you are there first thing in the morning Sunday when the sale starts, and even then theres no guarentees. I've missed out on several advertised games because I didn't get there early enough. Whats worst, many times they have less than five copies of an advertised $10 game and thats just bull shit.

I still have a raincheck from April to get Soul Calibur IV for $9.99 but they haven't(and most likely won't) gotten any more in. I'm going to try and use it at another Besy Buy although they told me when I got the raincheck that it's only for that specific Best Buy. Anyway, I need to find someway to let them know that(company wide) advertising cheap games that you have less than 20-30 copies of is a really unprofessional business tactic.

[duffmanth]

I don't know where you are getting your numbers from. The retail margin for large chains on video games and other consumer media is 30%. That applies to Toys R Us, Amazon, Target, Walmart and Best Buy. That's the same deal Gamestop gets on their new games. Obviously, on used sales their margin is whatever they pay for the game versus what they can sell it for. A smaller game store buying from a distributor usually only gets the 10%-15% margin you are talking about. If you spend a little time looking at the annual reports for Best Buy, game sales are less than 10% of their total sales and a little over a third of their recorded media sales. They make their money on appliances, computers, cell phones, cameras, electronics, etc....

Best Buy doesn't have to compete with Gamestop, but they are an easy target and frankly, if they even steal 5% of Gamestop's used sales, it will do significant damage. Gamestop has massive overhead with 4,000 stores and no other product lines to fall back on. They are under incredible pressure to keep delivering rising profits and any damage to that trend is going to create massive problems for them on the corporate level.

Personally, I buy most of my games from Amazon, but I know lots of people who buy from Gamestop and the only reason they do so is price. If a consumer can get the exact same game, sealed and perfect from Best Buy which is in every major area in the country today, for the same exact price as a used game from Gamestop, they are going to do it. Gamestop's only response will have to be to reduce prices further which means lower trade-in values which will have a direct impact on the number of people willing to sell to them and continue getting stuck in their circle of low TIV, store credit and the perpetual trading of games for far less than they are worth only to get another used game in poor shape.

The profit margin on games ISN"T 30%, not even close (unless profit margins have really gone up in the last few years?). I worked at a gaming retailer for almost 4 years and at a Best Buy for 1 Christmas, and can I tell you the average profit margin on new games is about $5-10, diddo for accessories, and maybe a few dollars on consoles.

[Bojay1997]

The profit margin on games ISN"T 30%, not even close (unless profit margins have really gone up in the last few years?). I worked at a gaming retailer for almost 4 years and at a Best Buy for 1 Christmas, and can I tell you the average profit margin on new games is about $5-10, diddo for accessories, and maybe a few dollars on consoles.

You are confusing your employee discount amount with the profit margin. Unless you worked in corporate, you have no idea what you are talking about. The profit margin for new games to a small local shop is $5-$10 depending on the game which is 10-15%. For larger retail chains it is 30% because they are buying at hundreds of times the volume. That's why Toys R Us is able to to the B2G1 sale every year and other retailers like Target have followed suit. I know from discussions with one distributor that services Amazon that on some bigger ticket items like Rock Band, etc..., they actually get a 40% margin. Of course, profit margin is not the same as profit. There are lots of costs which both Gamestop and Best Buy have that a smaller retailer and Amazon do not.

[duffmanth]

Maybe corporate and retail employees get diff. discounts, cuz mine sure wasn't 30%, it was maybe $5 at best.

[Bojay1997]

Maybe corporate and retail employees get diff. discounts, cuz mine sure wasn't 30%, it was maybe $5 at best.

Exactly, that's the point. Nobody gives their line employees items at cost. It would cause way too much fraud. Heck, if you have a resellers permit, you can buy from distributors directly and get $5 to $10 off MSRP for a single unit of a game. To get 20% or 30%, you need to buy in large chain retail quantities of thousands of units.

[Oobgarm]

They're saying discount is 5% over cost, which put my copy of Wii Sports Resort($50) close to $42.

That's only a 15% difference, which would indicate(roughly) a margin of 20%. Unless, of course, their cost is actually lower than that, which would not surprise me. But after looking at sales charts which detail margin, I don't see a larger margin in software.

I think this is a fabulous idea. Keep in mind that they're not actively targeting hardcore gamers, but just your average folks. Some hardcores will get in on the deal, sure, but you'd be surprised at how much difference a $5 discount can make to the typical Best Buy shopper. I don't think they're looking to really outdo GameStop, because that would be foolish. They're using the "sale" to increase volume and increase loylaty of those thrifty buyers.

If my store is any indication, outside major releases like Madden, NCAA, and Wii Sports, the gaming department has really stagnated and is in need of something to rejuvenate it a bit. A deal like this could do precisely that. It's one little store in Utah, and here we are, talking about it.

[garagesaleking!!]

Gamestop's used prices are so high anyways that it doesnt even matter. Selling used games for $55 is just wrong, who doesnt pay the extra $5 to get a new game. And anything gamestop sells for $39 or less used is probably already about the same price new at best buy. I dont see the big deal here.